Why is the Linden Dollar Tanking?

[ChinRey]

14 hours ago, Lindal Kidd said:

I am not sure I would describe the market's behavior as "tanking".

Tanking may be too strong a word but when you know how narrow the margins are in the SL rental business, it's easy to see why Prokofy and other medium and large sized estate owners are worried. From another thread here I understand that some of them have lsot quite a lot of tenants recently too and of course, the increased transaction fees don't help either.

I wouldn't be surprised at all if some estates went belly up in the near future. Not the big ones since LL can't afford to loose those customers and have to offer them some sort of relief and not the small ones since we never made any money from it anyway. But the medium sized ones with a few dozens or a few hundred sims may be heading for rough waters and the exchange rate change may well be the last straw. (Woops! Mixed metaphors - sorry!)

As for the reason, it may be that buyers are ore reluctant to sign up to the new Tilia terms than sellers.

[Qie Niangao]

7 hours ago, Sorciaa said:

I tend to buy my L on the market rather then from LL themselves and I have been watching that pretty closely. I used to buy at 260/$1 and it would have the 10 minute delivery time. Right now its at 265/$1 with the 10 minute delivery time.

Not that it matters really at all, but there's no knowing whether any L$ buy is fulfilled by sales from other residents or by shiny new L$s from the Lab's mint. It all goes through the Lindex the same way, just with different user interfaces to the exchange.

To split hairs elsewhere in the thread, stipends are not delivered through the Lindex; they're minted on the spot as they appear weekly in Premium members' accounts. They certainly affect the Lindex by increasing money supply, which is why I brought them up.

Also, the Marketplace thing is a little bit subtle, although it seems folks grasped the idea. It would be one thing if folks simply bought less stuff altogether; that would decrease demand for the L$, and that too would inflate the exchange rate. What I was muttering about, however, was a possible shift from Marketplace to in-world sales of the same volume of purchases. (This has certainly happened to me: I never much liked the Marketplace but I used to buy some stuff there; now I very rarely buy anything except at in-world events, of which there seem to be an ever-increasing number. Subjectively I get the sense that some individual events are waning in popularity, but that's hardly surprising when there are more of them every month.) Whether buyers choose in-world or Marketplace, the same sales represent the same demand for L$s, but buying on Marketplace also incurs a small L$ commission paid by the seller to the Lab, and that fee is a "sink": those L$s simply vanish from circulation, affecting supply rather than demand.

[Tari Landar]

1 hour ago, Alwin Alcott said:

this isn't the discussion, but seeing the amount of listed c-r-a-p that's pushing these numbers isn't making the MP a lot better, nor merchants or customers happy.

That too, but if I go on my rant about gachas, color/version variants, and how they're handled again someone is going to FFS me again, lol. (suffice it to say, folks can read that whole shpeal in the merchant forum). There is a LOT LL could do to fix nearly all problems on the MP, and appease far more people than they could with any other change anywhere else in sl. Their desire to do so is what seems to be seriously lacking. 

Edited October 5, 2019 by Tari Landar

[Da5id Weatherwax]

@ChinRey has a point - the margin on earning in SL is so tiny, you really do notice small movements.It's why we were looking so carefully at the changes in cashout fees earlier this year. A month that doesn't earn enough $L to cash out for fresh strings for the guitars and pay for 1/12 of my annual fee for my streaming service, keep enough inworld to pay for my workshop space and  a "few" uploads is one that I notice - and it doesn't take much of a lindex movement to generate one.

[Solar Legion]

Hmm, lets see here ....

Sweeping, hyperbolic title? Check. An initial post that lays out exactly what the OP (this specific OP at that) has concluded, based on nothing more than circumstantial "evidence" and their own internal monologue? Check. Moving goalposts? Check. Outright dismissal of any response that doesn't line up with their initial premise? Check.

That checklist goes on and on but boils down to the following: The OP is never interested in an actual discussion, ever - they're just looking for a bunch of people to simply nod their heads in "agreement" while praising them for being so "insightful" .... Heaven forbid you disagree too strongly either.

It's October, folks. There's always been a downward turn this close to the end of the year. Honestly ... For selling Linden Dollars you want the value of the Linden Dollar to be low - the less you have to sell to get a single dollar the better. On the other end, if you're buying Linden Dollars you want that value higher - the more Linden Dollars it takes to equal a single real world Dollar, the better.

Worry if the Buy side hits a hundred and fifty Linden Dollars to the Dollar and worry if the sell side ever hits three hundred to the dollar.

[Janet Voxel]

23 minutes ago, Solar Legion said:

Hmm, lets see here ....

Sweeping, hyperbolic title? Check. An initial post that lays out exactly what the OP (this specific OP at that) has concluded, based on nothing more than circumstantial "evidence" and their own internal monologue? Check. Moving goalposts? Check. Outright dismissal of any response that doesn't line up with their initial premise? Check.

That checklist goes on and on but boils down to the following: The OP is never interested in an actual discussion, ever - they're just looking for a bunch of people to simply nod their heads in "agreement" while praising them for being so "insightful" .... Heaven forbid you disagree too strongly either.

It's October, folks. There's always been a downward turn this close to the end of the year. Honestly ... For selling Linden Dollars you want the value of the Linden Dollar to be low - the less you have to sell to get a single dollar the better. On the other end, if you're buying Linden Dollars you want that value higher - the more Linden Dollars it takes to equal a single real world Dollar, the better.

Worry if the Buy side hits a hundred and fifty Linden Dollars to the Dollar and worry if the sell side ever hits three hundred to the dollar.

You left out the virtue signalling of "People earn a living on SL! The difference between 3-4L could me the difference between someone eating for the month!"

Meanwhile, we're talking about people that are paying thousands of dollars US in tier. I somehow think, someone that has $4000 to spend on tier isn't worried about their next meal.

[ChinRey]

1 hour ago, Da5id Weatherwax said:

@ChinRey has a point - the margin on earning in SL is so tiny, you really do notice small movements.It's why we were looking so carefully at the changes in cashout fees earlier this year. A month that doesn't earn enough $L to cash out for fresh strings for the guitars and pay for 1/12 of my annual fee for my streaming service, keep enough inworld to pay for my workshop space and  a "few" uploads is one that I notice - and it doesn't take much of a lindex movement to generate one.

It's even more critical for landowners than for merchants. If you sell less, you have less income but you're not loosing money. Even if you don't sell anything at all, you still break even.

Landowners have to pay every month and it doesn't take much change before they're in the red. We now have three fairly major changes coming at about the same time, increased transaction fees, Bellisseria competing directly against some of the most popular private estates and now the change in the exchange rate.

You can of course argue - as some do - that SL rentals is a bad thing in itself but how would Second Life be without the variety they offer and if only premium members were allwoed to own land?

I*m not speaking on my own behalf btw. Yes, I do have a few rentals but it's not a business in any way, I just try to cover a little bit of my tier. I keep the place because I've spent so much time and effort building it I can't bring myself to let go of it and a few dollars more loss isn't going to change that.

[Love Zhaoying]

The market shift is correlated to the size of women's bosoms. There's an expression for it, "Tanks for the mammaries".

[Lindal Kidd]

Well, I don't often see myself coming to Prok's defense, but I think Solar is a bit harsh here.

Here in SL, as Qie points out, we live in an economy managed by LL.  I hope that they have some really good models of how changes in one thing affect all the other things...but, given the inability of our best thinkers to model and control real world economies, I have serious doubts about that.  Lately, LL has made quite a number of changes in that economy...changes in land purchase and upkeep costs, changes in the cost of prims (not charged for directly any more, thank goodness, but indirectly through the LI per sq m. capacity of land).  And changes in $L fees...for purchase, for sale, and for cashout.  Changes in Premium membership fees, and changes in the total land area of the grid.

So it's not surprising that we are also seeing some changes in the $L exchange rate.  Whether these are deliberate on LL's part, or simply unintended consequences of the OTHER changes, we don't know...but I'd bet on the latter.  In either case, I don't think it is entirely a seasonal thing.  I don't keep the detailed records that Prok does, but as I recall, last year at this time the selling price was more like $L250 - 252.

[Tari Landar]

25 minutes ago, ChinRey said:

It's even more critical for landowners than for merchants. If you sell less, you have less income but you're not loosing money. Even if you don't sell anything at all, you still break even.

That's not entirely true, some creators could (do) very well lose money, in the same manner some rental business owners can, even if not always on the same scale (though even that's possible-it depends entirely on the merchant's overhead). No sales at all can hit any business owner hard, especially if it's a repeated event over the course of months. 

 All creators, all business owners, need resources (this includes whatever asset it is being sold, be it land, service(s) or products one creates, not sure which word to use there other than asset) and resources cost.  Now which resources they pay for, which ones they create themselves,  which ones they can/can't recoup, etc.. I have no clue- you'd have to ask each individual.  I have seen what some merchants spend to be merchants-and it's not always quite as low as some think. Not being able to recoup costs is what tends to close most businesses (of any type) down, especially in sl.

Though I do take the same approach with all business owners.....never allow your costs to exceed what you're willing to lose. In other words, if your  business does not pull in more than you're spending, or barely does, no matter the reason, you've probably got some configuring to do, at the very least, some thinking. It could be possible that it's just a lull and that may get better at a later date, or at least even itself back out (with or without more/different effort(s) on your part, again, entirely subjective). Scaling back when overhead is more than one can withstand is a wise option, planning for the possibility is even more wise-for any business owner. It may not be an easy transition, and the cost of doing so may be rough at first, but once that dust settles, one should be in a better place (speaking purely from a financial standpoint). If not..I would venture a guess that person didn't really scale back enough to make the business expenditures a worthy investment, or maybe they never were.

Of course my opinion doesn't really change the facts for business owners losing money and not necessarily understanding why, or not liking the reason why. 

 

[Solar Legion]

My take is a combination of observation and personal experience where the OP is concerned, Lindal.

Valid concerns can be raised, certainly. An actual discussion could evolve or be had between some of those responding, yes.

My description was limited/focused in on a particular pattern - one that shows up in nearly every topic the OP has made to date.

I do not often point it out but when I do it is to warn newer posters or to set the record straight on motive.

Edited October 5, 2019 by Solar Legion

[Arwen Serpente]

I cash out every month. So I went back to my records - end of 2017 I was cashing out at 246; end of 2018 249/250. The rate started to escalate in the first half of this year (2019) by just a small amount (1 or 2 L), then right before the change of the cash out fee to 5% there was a rush to beat that increase, so exchange went to 253. Seemed to stabilize there for a short while. More recently, it has been steadily increasing, albeit in small increments, but it looks like 255/256 for now.  Not sure what's causing it.

[Lindal Kidd]

That's a very good observation, Arwen!

During the same period, LL made all those changes in land...more prims, less $$$.  And now, with Bellisseria, more total land, too.

Could it be as simple as, "cheaper land/prims = less valuable $L"?

[Silent Mistwalker]

8 hours ago, Tari Landar said:

That too, but if I go on my rant about gachas, color/version variants, and how they're handled again someone is going to FFS me again, lol. (suffice it to say, folks can read that whole shpeal in the merchant forum). There is a LOT LL could do to fix nearly all problems on the MP, and appease far more people than they could with any other change anywhere else in sl. Their desire to do so is what seems to be seriously lacking. 

Oh FFS.

😁

[Coffee Pancake]

movement : yes

tanking : no

[Sassy Kenin]

 

In my Imagination this would be Ebbe responding to this thread🤗

 

[Da5id Weatherwax]

20 hours ago, Tari Landar said:

21 hours ago, ChinRey said:

It's even more critical for landowners than for merchants. If you sell less, you have less income but you're not loosing money. Even if you don't sell anything at all, you still break even.

That's not entirely true, some creators could (do) very well lose money, in the same manner some rental business owners can, even if not always on the same scale (though even that's possible-it depends entirely on the merchant's overhead). No sales at all can hit any business owner hard, especially if it's a repeated event over the course of months. 

 All creators, all business owners, need resources...

 

Both good points and ones I can really connect with as a performer. I pay for my stream whether I'm using it or not. Whether anyone shows up to my sets in SL or not I'm still spending those hours each week putting wear and tear on my gear, along with the same for the 5 or so hours each week preparing and rehearsing the set list I'm going to use the following week.

We've all got RL costs for what we do in SL. If we run a business or offer a service of any kind inworld we're (usually) trying to make enough $L to cover those costs.

 

[French Couturier]

What is going on? It has regularly been about 251 or 252 all year. I just looked and it now says 258. This isn't the beginning of the great virtual depression is it? Gonna go stock up on virtual canned goods just to be safe

Edited October 7, 2019 by French Couturier

[ChinRey]

On 10/6/2019 at 2:21 PM, Da5id Weatherwax said:

Both good points and ones I can really connect with as a performer.

I suppose we are comparing miseries here. The bottom line is there's only so much money in SL and the more LL needs/wants, the less there is for independent entrepeneurs of all kinds.

[Alyona Su]

I remember specifically (way back) when the average conversion was L$270:$1 U.S. I would like to see this again. ~crosses fingers~

As for the affect of L$250 versus L$255, let's bump it up to 270L:1. Think about it: 250Lx$100=25,000L versus 270Lx$100=27,000L; a 2,000L difference.

• 2,000L/270L=$7.40
• 2,000L/255L=$7.80
• 2,000L/250L=$8.00

So a L$20 difference in the LindeX is about $0.60 (60 Cents U.S,) and a L$10 (@ 255:1) is a difference of $0.40 (40 Cents. (!)) if converting $100 (Which I imagine is at the very high spectrum for most people.) Even for those owning private regions and converting $300 U.S. worth to cover region "tier", the different in this example is about $2.00 U.S. Tanking? Seriously? 

My point being that unless you are converting large-bulk of Linden Dollar to U.S. Dollars this difference doesn't make for much of a difference. For those where it does make a difference, deal with it. It's not like you can't afford it.

Edited October 7, 2019 by Alyona Su

[Aemeth Lysette]

8 hours ago, ChinRey said:

I suppose we are comparing miseries here. The bottom line is there's only so much money in SL and the more LL needs/wants, the less there is for independent entrepeneurs of all kinds.

I always said LL should open its own store on MP for official stuff we might want. Releasing past Premium gifts for other people to buy would be a good example (but give a limit like, they have to be a year old).

[ChinRey]

5 hours ago, Aemeth Lysette said:

I always said LL should open its own store on MP for official stuff we might want.

Like this you mean? https://marketplace.secondlife.com/stores/68424

[Aemeth Lysette]

Yeah, they should expand on that more. Add older premium/gift packs to there that people haven't seen in a bit but still want. For example, I still wear some premium glasses from 2015. I like them, they're pretty solid and they don't add a lot of complexity. I bet other people would buy something like that if they could.

[rasterscan]

Cashout fees have become eye watering. The MP star system is used as a griefing tool at worst and a griping fest at best. ( I cannot figure out your product so here's one star and I'll call it rubbish rather than contact you for help ). Once a pristine 5 star is lost it can never be recovered beyond 4.5 stars. That sux badly. Lastly, imho, unless a seller is one of the 'big 6' you'll sell hardly anything which kills all motivation. 

 

 

Edited October 9, 2019 by rasterscan

[Tari Landar]

On 10/8/2019 at 2:46 AM, Aemeth Lysette said:

Yeah, they should expand on that more. Add older premium/gift packs to there that people haven't seen in a bit but still want. For example, I still wear some premium glasses from 2015. I like them, they're pretty solid and they don't add a lot of complexity. I bet other people would buy something like that if they could.

The only problem (ok not the only, the main lol) with them later selling premium gifts, is that they've been trying to sell us, for years, on the idea that those "gifts", all of them, are perks, for premium only. If they started selling them now, regardless of quality or personal opinions of such...they'd have some pitchforks coming at them from a lot of angles.  I may not be a premium member, since I have no use for it personally, but I would understand completely if people got a bit up in arms about that.  LL already "made their money" on those items by selling premium to begin with, people paid for them when they bought premium. They would be, in essence, double dipping...or, at least, I can see such a conversation going in that direction anyway.

Either way, I can't see them selling previous premium gifts at all, it would rub too many people the wrong way. Plus, lindens don't really sell stuff, for good reason, not sure they should get into the business of doing that, either.  I also don't think very many people would buy them, either, lol. Most premium "gifts" aren't exactly usable for most people-a lot are REALLY prim/Li even resource heavy. Others can argue on the quality of them-I think that bit would be pretty subjective.